Gift Card Sales to Surge Again

This Holiday as Popularity Increases Consumers to Spend a Total of $18.48 Billion on Gift Cards This Holiday Washington, DC, November 17, 2005—With gift cards ranking third on consumers’ wish lists this year, there is no sign that the craze is slowing down, according to the findings of the latest National Retail Federation (NRF) survey. The third annual NRF Gift Card Survey, conducted by BIGresearch, found that gift card sales will total $18.48 billion this holiday season, a 6.6 percent increase over 2004, when holiday gift card sales hit $17.34 billion. The average consumer will spend $88.03 on gift cards this holiday season, 15.6 percent of their holiday gift budget.

“Gift cards present a win-win situation for both consumers and retailers,” said Tracy Mullin, NRF President and CEO. “Gift cards take the guesswork out of giving and since they take up minimal shelf space, they are easy for retailers to stock and display.”

With their popularity at an all-time high, gift cards have made an appearance on the lists of both gift givers and receivers. More than two-thirds (75.5%) of consumers polled said that they plan on purchasing at least one gift card, and more than half (52.3%) of consumers would like to receive gift cards this holiday season.

“The popularity of gift cards is soaring among consumers of all ages,” said Phil Rist, Vice President of Strategy for BIGresearch. “Once seen as a quick solution to a last minute present, gift cards have moved to the forefront as a holiday favorite to both give and receive.”

Gift card information:

NRF encourages consumers to shop smart for gift cards. To ensure that a recipient receives the card’s full value, shoppers should only buy gift cards from reputable retailers (not online auction sites). Gift cards on online auction sites are more likely to be counterfeit or obtained through fraudulent means. Additionally, consumers should keep their original receipt with the value of the card that they purchased in case there are any problems with the card when it is redeemed.

Retailers do not count a gift card as a sale when it is purchased—instead, they wait until the gift card is redeemed and merchandise is exchanged. As a result, some of the $18.48 billion spent on gift cards this holiday may not show up in "holiday" sales, but instead as sales in January or February, when the gift card is redeemed.

Most of today's gift cards differ from traditional gift certificates because they are "stored value" cards. When a consumer spends $25 from a $50 gift card, the card automatically updates the balance. This is more efficient than the retailer reissuing another gift certificate to the consumer for the balance.

Retailers have different policies for gift cards. Some stores' gift cards expire over a certain period of time (usually 12 months or more) and some stores' cards depreciate month-by-month if a card has been inactive for a certain period of time. Most retailers are moving away from expiration dates and depreciation fees in response to their customers’ requests, but NRF recommends that consumers understand individual retailers' policies before purchasing gift cards.

Service fees and expiration dates are more common with mall-issued and bank-issued gift cards than retailer-issued cards.

Due to improved technology, some retailers are able to reissue a lost gift card if consumers have kept the original purchase receipt. Some retailers also encourage gift card recipients to register their card through the store's website, which enables them to check their balance online and receive a new card if they lose or misplace the original card.

Another convenience factor is that many stores are able to carry gift cards at their check-out counters because today's gift cards are not active until scanned. Also, many retailers like grocery stores and drug stores carry a variety of different gift cards at their registers--for movie theaters, coffee shops, and clothing stores. NRF continues to forecast that holiday sales will increase 5.0 percent this year to $435.3 billion.

About the Survey

The NRF 2005 Holiday Consumer Intentions and Actions Survey was designed to gauge consumer behavior and shopping trends related to the winter holidays. The survey, which polled 7,128 consumers, was conducted for NRF by BIGresearch from November 2 – November 9, 2005. The consumer poll has a margin of error of plus or minus 1.0 percent.

BIGresearch is a consumer market intelligence firm that provides unique consumer insights that are gathered online utilizing very large sample sizes. BIGresearch’s syndicated Consumer Intentions and Actions survey monitors the pulse of more than 7,000 consumers each month to empower its clients with unique insights for identifying opportunities in a fragmented and changing marketplace.

The National Retail Federation is the world's largest retail trade association, with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalog, Internet, independent stores, chain restaurants, drug stores and grocery stores as well as the industry's key trading partners of retail goods and services. NRF represents an industry with more than 1.4 million U.S. retail establishments, more than 23 million employees - about one in five American workers - and 2004 sales of $4.1 trillion. As the industry umbrella group, NRF also represents more than 100 state, national and international retail associations. www.nrf.com.